For all intents and purposes, this was not a complicated budget. In fact, some would say there was not a lot to it, especially for small business. However, if we look a little deeper, we can find much that could affect the way we exercise our business and even benefit from it. But first, let’s take an overall look at what the budget says about the economy, so that we get a broader picture of our countries economic position, which influences our businesses position.
A budget surplus has been recorded for the last financial year – indeed, for the second year in a row. However, experts suggest the surplus may become a deficit over the next 4 years. Principally because the budget focuses on increasing spending over that time for such things as tax cuts, cost of living relief and measures to support incentives for the integration, production and supply of cleaner, renewable energy sources – known as the Future Made in Australia Act. All this spending may well put further pressure on inflation. An upturn in inflation can result in increased costs for small businesses, resulting in higher costs for consumers. Certainly, something to plan for over the next few years.
Direct Benefits & Effects on Small Business
There were a few direct benefits and effects on small businesses in this budget.
- Tax Cuts and Incentives
Maybe the most direct effect of this budget is the extension of the instant asset write-off for another 12 months. This will continue to boost small business cash flow by speeding up the processing to help businesses receive the funds earlier. Effectively reducing the initial cost of the asset. However, it is limited to businesses turning over less than 10,000,000 and the asset must be less than $20,000.
- Energy Bill
All eligible small businesses will receive an energy bill discount of $325. Tho’ this may be small; it will still assist to alleviate costs in a small way.
- Boosting Competition and Reducing Compliance Costs
This boost in competition includes strengthening the business merger process and abolishing many tariffs, leading to a reduction in regulation barriers.
- Tax Compliance
There will be an extension to the tax avoidance taskforce for another two years. Since Covid, the government has started to tighten the reins on detecting, preventing, and mitigating tax fraud. This increase in ATO review activity will mean that if you haven’t had a review in the last two years then you can probably expect one sometime in the next 12 months.
- Superannuation on Paid Parental Leave
The Government will provide extra support for small business employers administering the Paid Parental Leave scheme. This will be directly focused on small businesses thru funding of up to $1.1 million.
Secondary Benefits & Effects on Small Business
While the following benefits of the budget are connected more to individuals, there’s also a flow on effect to small business thru an increase demand in supplies and services, improved employment opportunities, and support services from the government.
- Stage 3 tax cuts
These cuts are an adjustment to the tax cuts announced by the previous government. They are an adjustment of the personal tax rates and will offer an average cut of around $36 a week. While these tax cuts directly affect individuals, it can have a flow on effect thru an increase in demand for goods and services. For those supplying goods and services, this can mean an increase in revenue.
- Cost of Living Assistance
Adding to the stage 3 tax cuts, the government has announced several cost-of-living support benefits. Again, relieving individuals of certain cost of living burdens. These benefits include such things as energy bill relief, rental relief, higher education loan relief, targeted support for JobSeeker payment recipients etc. The flow on effect of which means an easing of cost-of-living burdens and more demand for goods and services. An indirect benefit for small business.
- Education Benefits
The government has set a goal to improve workers tertiary qualifications by 2050 by offering fee-free, uni-ready courses. This means there are opportunities for up-skilling of current staff or even more diverse opportunities for employing skilled workers. The primary focus will be on industries related to clean energy, construction, and manufacturing, with a specific focus on supporting women in these careers.
Supplementary Benefits for Small Business
There are also some supplementary benefits for small businesses embedded within the budget. Here are a few:
- $777.4 million has been allocated to develop local jobs, services, and economic opportunities in remote regions around Australia.
- To assist small businesses to operate more effectively in remote areas of Australia, $68 million is also being spent on rolling out Wi-Fi in remote communities.
- $10.8 million has been allocated to support mental health and the overall well-being of small business owners. It can be a stressful experience to run a small business, especially in these economic times. This is a welcome addition.
A Final Note
A large part of this budget has a focus on the integration, production and supply of cleaner, renewable energy sources thru the $22.7 billion Future Made in Australia Act package. Numble has always advocated for a healthier, cleaner world, as evident in our support of sustainable development goals. We support these incentives and hope that as a small business owner you can find ways to embolden this notion too.
If you want to make the most of this year’s budget, and make sure your business is kept up to date with Government and ATO announcements, get in touch with Numble for an obligation-free consultation.
